In the current environment of regulatory change and market consolidation, many external asset managers are contemplating if it's time to pass the torch. Should this be an option for you, there are many considerations when beginning and implementing a succession strategy. Here are some tips from the UBS Wealth Planning experts.
Define a clear owner strategy and vision for the future – and don't do it alone.
Sustainable succession can only be achieved with a clear roadmap. Entrepreneurs need to detach themselves successfully, which can lead to many psychological and objective obstacles. Surrounding yourself with partners, board members, and sometimes most importantly, your family, ensures you consider both the future of the firm and your future.
Start to plan earlier than you think is necessary. And check your emotions at the door.
Successful entrepreneurs owe it to themselves and their company to be thorough in their plan. When decisions are considered in haste, without alternatives or with too much emotion, the solutions become more difficult or prone to risk. Emotional roadblocks are often responsible for poorly implemented succession plans.
Consider a full range of strategic options for your successor.
It might seem obvious to search within the company or entrepreneurial family for your successor, but also consider alternate solutions that might give the business an advantage. It is imperative that your successor has the right business acumen. All options must be evaluated without focusing too soon or too resolutely on a single solution.
Prepare your successors to seamlessly carry on, and keep everyone informed.
The identified successors – whether family or management – need to be able to be prepared and motivated to lead. Identify in advance a pool of candidates in the operation for future succession and ensure that the company organization, leadership and accounting are all in optimal order. And communicate the succession timeline so there are no surprises.
Secure the money you've earned, and bring in the right advisors to help.
Start thinking long-term about ways to invest your money separately from the company's assets. Now is not the time to pull in underqualified advisors, nor to overlook or undervalue wealth and tax planning. The interdependencies of economic, legal, tax and financial issues are not easy to assess, and many times a prudent option may be to identify an external independent to coordinate the succession process.
Clearly define what "exit" means – both for you and your successor.
You've decided to step away, and everyone needs to know – and agree – to that definition so the business continues to run smoothly. Often times an entrepreneur is unable to detach from the company and really let it go. Define what this means, and stick to it.
In addition to these themes, there are a myriad of other considerations to ensure a clean and efficient handover to your company's successor. Whether you're merging, buying, selling or moving onto the next phase of your life, it's important to ask the right questions. Let the team at UBS help ensure you're on track for a successful succession.
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